Sanctions, Jail, Possible For Refusing Debtor’s Discovery

Posted on | November 11, 2008 | 2 Comments

2009-1005 US Philips v. Int'l Norcent
CD/CA 06-1366
Judge Manuel Real

Defendant Jennifer Long appeals from the order of Judge Manuel Real sanctioning her for refusing to comply with subpoena, court orders, and making false statements under oath.  This case is related to 2008-1385 (covered by us here) in which she appealed the jury's verdict finding her joint and severally liable for over $12 million (plus trebling, attorney fees, and interest).  The current sanctions relate to a debtor's exam and discovery efforts by US Philips towards collecting on the judgment.

After having been found personally liable, Long decided to stonewall discovery into her finances, refusing to produce documents responsive to a subpoena and, according to the court, trying to hide assets.  Long's family apparently owns numerous companies, including several in China, and made various transfers and sales of assets to thwart collection—despite a court asset freeze order.  The court found these efforts included:

• Ms. Long, her brother, Kevin Long, and her mother, Shu Zhi Ju, co-own or co-control many companies including without limitation Shanghai Hongsheng Technology Co., Ltd. (“Hongsheng”), Hongpu Industry, Shanghai Lijie Investment Co. Ltd. (“Shanghai Lijie”), NHI, INT and IRC. (D.I. 610, p. 6, ¶ 40)

• Ms. Long directed a $13.7 million transfer to her family-owned Chinese company to avoid the Judgment. (D.I. 610, p. 5, ¶¶ 32-35)

• Ms. Long and her family manipulated assets through companies they own or control, including a $255 million transfer. (D.I. 610, p.6, ¶¶ 41-42)

• Ms. Long demonstrated she will conceal her assets and has the ability to move her assets through her businesses out of Philips’ reach. (D.I. 610, p. 7, ¶ 48)

• Ms. Long has a track record of failure to fully disclose her assets, failure to pay the Judgment, and liquidate and conceal assets despite bankruptcy asset freeze. (D.I. 610, p. 11, ¶ 71)

• Ms. Long’s reported annual salary is insufficient to support her lavish lifestyle. She must have other sources of income, which other sources she failed to disclose and continues to withhold from Philips. (D.I. 610 p. 4, ¶¶ 23-26)

• Ms. Long sold a Maserati in direct violation of a bankruptcy asset freeze order, and that is a fraudulent transfer in contempt of the Judgment. (D.I. 610, p. 2 ¶ 6)

The court was not pleased and ordered a bevy of sanctions including:

• requiring production of her financial records to the Court;

• $1,000/day sanction if the records are not produced;

• possible incarceration if each daily sanction is not paid within 1 day of it becoming due; and

• turning her passport in to the Court and instructing the State Department to deny her any new, replacement, or duplicate passport.

More reading:

Counsel:

US Philips: Keats McFarland & Wilson (Beverly Hills); Finnigan Henderson Farabow Garrett & Dunner (DC).
Long: Seyforth Shaw (Los Angeles)

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